AGRIBRANDS INTERNATIONAL: Sued in MO over Proposed Merger with Ralcorp----------------------------------------------------------------------In September of 2000, a shareholder suit was filed in the Circuit Court ofSt. Louis County, Missouri against the Company and the individual membersof the Board of Directors alleging that the Directors failed to carry outtheir fiduciary duties in recommending the merger with Ralcorp Holdings,Inc. The suit requests: (i) the certification of a class consisting of allof the shareholders, (ii) injunctive relief, (iii) attorneys fees andexpenses, and (iv) such other relief that the Court deems appropriate.Agribrands has responded by denying the allegations. The Company believesit has adequate insurance coverage for damages in excess of $2,500,000. TheCompany is responsible for the costs of defense up to the deductible.

CALIFORNIA: Lawyers Split $88.5 Mil for Overturning Levy in Smog Case---------------------------------------------------------------------The Los Angeles Times reports that five law firms will split $88.5 millionfor their role in successfully suing California over smog fees imposed onpeople who registered out-of-state vehicles in California in the 1990s. Thereport reminds that this is state tax money. An arbitration panel made theaward, among the largest attorneys' fees ever paid by the state. The moneywill come from $ 665 million allocated by Gov. Gray Davis and theLegislature to pay refunds to people who paid the $ 300 fee on as many as1.7 million vehicles. After the state lost in a trial court and a statecourt of appeal, Davis a year ago directed that it stop collecting thefees, and called for refunds to affected motorists.

"This money never belonged to the state," Davis said when he signedlegislation authorizing the refunds earlier this year. "It shouldn't havebeen collected in the first place, and it should be returned."

One of the law firms that will claim a share of the $ 88.5 million isMilberg, Weiss, Bershad, Specthrie & Lerach. Bill Lerach and his firm, withoffices in New York and San Diego, have been among Davis' major donors,giving him $ 221,000 during his 1998 election campaign, and $ 20,000 thisyear.

Davis distanced himself from the attorneys' fees by appointing retiredCalifornia Supreme Court Chief Justice Malcolm Lucas to the three-memberpanel that set them. Lucas, a Republican, is the conservative jurist whoreplaced Rose Bird as chief justice when voters ousted her in 1986.

The plaintiffs' attorneys selected another member of the panel, and bothsides agreed on a third.

"The Legislature decided that using arbitrators was the way to go, and theyput it in the bill," Davis spokeswoman Hilary McLean said. "The governorwanted the rebates paid to people."

Representatives of the law firms declined to discuss the award, saying theywere bound by a confidentiality clause in the arbitration agreement.

The $ 88.5 million may be the largest attorneys' fee ever awarded againstthe state. Lawyers in the state attorney general's office were aware of nolarger award, said spokesman Nathan Barankin. State Controller KathleenConnell said she believes it is the largest ever awarded by the state.

"I'm going to be exploring every option I have to freeze this payment,"Connell said. "No one can recall any settlement that even comes close."

Connell raised the possibility of asking the panel to reconsider the amountor persuading the firms to take less.

"It is a stunning number, isn't it," said Connell, a candidate for mayor ofLos Angeles, who must sign the check. "I'm deeply distressed. It is a hugewindfall."

Connell said she is attempting to determine whether there is any recourse.However, the panel's decision says the money must be sent by late December.

"The tort system needs a complete overhaul," said Assemblyman TomMcClintock (R-Northridge), who pushed for the refunds. But McClintock addedthat the $ 88.5-million award "is a cost the state willfully incurred whenit broke the law and imposed a fee it knew it was illegal."

If the state had settled the case earlier, the attorneys' fees would havebeen far lower. The Superior Court judge who ruled against the stateordered it to pay $ 18 million to the attorneys. The state appealed, lostand dropped the case.

In settling on the $ 88.5-million figure, the arbitrators noted that thelawyers had worked for five years on what was a "difficult and risky" case.They noted that the result--legislation signed by Davis earlier this yearthat granted the smog fee refunds--"provided exceptional results, in that apotential 1.7 million claims for tax refunds would be paid 100% of the $300 fee , plus interest."

The $ 88.5 million represents 13.3% of the $ 665-million fund set aside byDavis and the Legislature. The attorneys had sought 17.5%, or more than $100 million in fees.

Republican Gov. George Deukmejian signed legislation at the start of therecession in 1990, imposing the $ 300 smog impact fee on people whoregistered out-of-state cars in California.

The case was not a class action. It was brought by four people who bridledat the fee in the mid-1990s. One was Barron Ramos, who in 1994 was a lawstudent in San Diego. Ramos sued after his wife was forced to pay the feewhen she brought her Mazda to California from Washington state.

In time, five law firms took the case. The courts held that the smog impactfee violated interstate commerce laws.

So far, the state has paid $ 331.1 million to the owners of 863,340vehicles. Another 100,000 claims are pending. People who paid the fee havethree years to claim their money. (Los Angeles Times, December 1, 2000)

DEVRY INC: Computer-Systems Training Faulty, 3 Students Sue-----------------------------------------------------------DeVry Inc. shares tumbled 22 percent last Thursday November 30 after theOakbrook Terrace technical-education concern was sued by three recentgraduates who contend the computer-systems training they received waswoefully inadequate.

DeVry downplayed the litigation as a "nuisance suit" involving "frivolous"claims. But investors were less sanguine: In New York Stock Exchangetrading, DeVry shares fell $8.37 to close at $30.31.With about 2 millionshares changing hands, trading volume was more than nine times that of anaverage day.

The for-profit education provider disclosed the student lawsuit at the sametime it released fall enrollment figures that fell somewhat short ofanalysts' expectations. While that shortfall in enrollment threatens tosqueeze near-term revenue, it was the lawsuit--with its potentiallydamaging assertion that DeVry is graduating students who lack "appropriateskills for employability in the computer information systems field"--thatwas the more eye-catching development.

DeVry has prospered from the protracted boom in demand for computer-savvyworkers, and any challenge to the quality of its ability to place studentsinto the workforce threatens one of the key factors that has fueled DeVry'srapid growth through the 1990s. Officials hurried to limit the possiblefallout from the suit, which seeks class-action status.

The plaintiffs' claims "are belied by the facts," said DeVry PresidentRonald Taylor. "Employers continue to recruit DeVry students semester aftersemester," Taylor said. Of the computer-studies group the three plaintiffswere in, he said fully 86 percent of the graduates had found employment inthe field within six months, at an average starting pay of $38,900.

"We can't do what they allege we do and still produce people who are assuccessful as our students are in the workplace," he said.

With the domestic economy strong and corporate employers in a tight jobmarket hungry for technologically adept employees, DeVry and competitorslike ITT Educational Services have profited in recent years. DeVry'sundergraduate enrollment is up 85 percent from 1995.

DeVry now operates 21 campuses in North America, where 47,066 undergraduatestudents pursue studies that range from one-year accreditation courses tobachelor's degree programs in such fields as business administration,electronics engineering and computer engineering. The company also operatesthe 7,149-student Keller Graduate School of Management, which offers MBAand other post-graduate degrees at sites around the country. In NovemberDeVry opened Keller sites in Orlando and Bellevue, Wash., said Dennis J.Keller, DeVry chairman and chief executive.

An undergraduate accounting degree costs students a total of $31,000, whilethe computer information systems degree that the plaintiffs obtained runsnearly $35,000.

The student lawsuit, filed in Cook County Chancery Court, says DeVry'sadvertising fraudulently induced students into its programs.

The ads promised "Advanced education that equips you with the technical andbusiness skills that companies need," along with an active job-placementservice for graduates, the suit noted. But the three students, who enrolledin the school's computer information systems program in 1995 and graduatedfrom the Chicago campus in early 1999 with solid grade point averages, saythat is not true.

"The goal of the school is to put bodies in the classrooms," said attorneyMichelle A. Weinberg, who is representing the students. There's nothingwrong with that approach, she said "if they're delivering what theypromise."

Afshin Zarinebaf, Mustafa Husain and Ali Mousavi allege in their lawsuitthat DeVry did not offer the cutting-edge computer training it promised,but instead used dated equipment and study materials.

Zarinebaf, the suit says, was told at job fairs and in interviews withnumerous companies that they had had "bad prior experiences with DeVrygraduates' lack of training." The student was fired from his first job at adot-com concern after two weeks, the suit says, allegedly because he didnot have adequate knowledge of computer languages despite his bachelor'sdegree.

Zarinebaf's second employer fired him after five months, citing the sametraining shortcomings, the suit continues. The other two plaintiffsreported similar brief, unhappy job experiences ending in dismissal.

"They're having trouble getting and staying employed at the level for whichthey were supposedly trained," said Weinberg, the plaintiff attorney.

Taylor, the company's president, suggested that in today's hot job market"graduates who don't have some kind of problem--personal orpersonality--are doing well."

The students' suit also contends that DeVry admitted applicants who werepatently unqualified, and that "the sole purpose of recruiting andenrolling such persons" was to get the students qualified for federallyinsured loans and tuition grants--a practice that would benefit the school,even if the students fail. (Chicago Tribune, December 1, 2000)

FORD CANADA: CEO Retires; Takes Stock of Changes Including Dealership---------------------------------------------------------------------Bobbie Gaunt, president of Ford Motor Company of Canada Ltd., will retireon Dec. 31 after a turbulent three-and-a-half-year term that reshaped theCanadian unit of the world's second-largest auto maker.

Gaunt brought radical change to Ford Canada, including the elimination ofthe Mercury line of cars in Canada; a move by the company to the forefrontof automotive e-commerce and a plan to construct a new head office inOakville.

But the time has come to spend more time with family and friends, the54-year-old president and chief executive officer said, adding that shealso wants to work on behalf of such causes as improving literacy and thefight to cure breast cancer.

"As I was thinking about what's next in the Ford world, I realized thatthere isn't anything that would really come close to what I've been able toexperience at Ford Canada," she said in an interview

An internal announcement about Gaunt's departure was made late last TuesdayNovember 28; some Ford dealers were told last Tuesday night.

No successor has been named although Ford Motor Company in Dearborn, Mich.,has been aware for some time that Gaunt, a native of Washington, Pa., wascontemplating retiring to her property in Saugatuck, Mich., on the shoresof Lake Michigan.

In fact, she said, she thought about retiring last year, but wanted toremain for at least another year to help lay what she called a foundationfor "doing business on the customer's terms."

Creating that kind of company is a major shift from the way Ford Canada didbusiness when she arrived in April 1997, she said.

Then, the auto maker was "narrowly focused on sales and marketing andservice in making sure that we were managing our warranty policiescorrectly."

But that has changed, she said, with the purchase last year of YoungDrivers of Canada, the creation of Fastline services outlets that make iteasier for Ford owners to service their vehicles, and the e-commerceinitiative called Buyer-Connection - a pilot project that will eventuallyallow Canadians to buy any Ford vehicle over the Internet.

But changing the way Ford Canada does business has harmed the company'srelations with its 553 dealers who sell the cars, trucks, minivans andsports utility vehicles produced at three assembly plants in Canada andothers in the United States and Mexico.

Halting the sale of most of the Mercury line in Canada angered manydealers, especially those with Lincoln-Mercury dealerships. Four havelaunched a lawsuit against the company that has been classified as aclass-action lawsuit.

Ford also angered some dealers by instituting a program called Blue Ovalthat involved a levy on sales that would finance a bonus program fordealers who scored well on customer satisfaction surveys. That program hasbeen modified, but many dealers remain unhappy. (The Edmonton Sun, December1, 2000)

The lawsuit was filed last Thursday November 30 in Kauai Circuit Court onbehalf of Michael Sheehan. It argues that the company's directors abandonedtheir responsibility to shareholders, gave preferential treatment to Caseand entertained a $26 million offer from Case that was far too low.

The lawsuit asks that the deal for 171,000 outstanding shares, at $152 ashare, be stopped or if it is approved, that it be reversed and thatshareholders recover damages.

It also seeks class action status from the court on behalf of allshareholders.

Shareholders were to meet Friday morning to approve or deny the deal. Thedeal requires approval by at least 75 percent of the outstanding shares forapproval.

Grove Farm owns nearly 22-thousand acres of land on Kauai, the Kukui GroveShopping Center and an unsold portion of the adjoining Puakea developmentproject, which includes a sewage treatment plant and a 10-hole golf course,covering about 800 acres. (The Associated Press State & Local Wire,December 1, 2000)

In a complaint filed November 30 in the United States District Court forthe Eastern District of Wisconsin, the law firm extended the lawsuit tocover investors who acquired HRHYX or HRSDX shares as early as 1997 andsuffered a loss due to fraud.

The new complaint seeks damages on behalf of investors who bought the fundsfrom November 18, 1997 through October 15, 2000 (the "Class Period").Berman DeValerio & Pease, which has represented defrauded investors inclass actions for nearly two decades, had filed a complaint againstHeartland on November 13, with a class period of May 1, 1999 throughOctober 16, 2000.

The new complaint alleges that from at least November 18, 1997 to October16, 2000, HRHYX and HRSDX issued materially untrue and misleadingstatements about the net asset value ("NAV") of the two funds and the truerisk of investing in them. On October 16, 2000, the funds' advisorsblindsided investors by announcing that they were drastically writing downthe NAV of the funds. Specifically, HRHYX's NAV was reduced 70% from $8.01per share to $2.45, and HRSDX's NAV was reduced 44% from $8.70 per share to$4.87.

HOLOCAUST VICTIMS: Court Rejects Eastern Europerans Suit Against Bahlsen------------------------------------------------------------------------A German court rejected a reparations claim by former slave laborersagainst a cookie company Friday, saying the statute of limitations hadpassed.

The 60 eastern Europeans had sued the Bahlsen biscuit company for between9,000 and 50,000 marks, each for a total claim of more than one millionmarks (510,000 euros, 439,000 dollars).

Most of the plaintiffs were elderly women from the Ukraine who weredeported to Germany in 1941 and forced to work for Bahlsen.

The judges said that March 15, 1994 had been the deadline for such suitsagainst German companies, set as part of an international agreementcovering German unification in 1990.

The class action suit against Bahlsen was filed in 1999.

Germany has announced plans to compensate former slave laborers with a10-million-mark fund backed by the government and industry, but the dealhas been held up by failure to reach an agreement in the United States toprevent further suits by groups of victims.

The court did not clarify whether the fund's existence would invalidatefuture suits against German companies that used slave labor. (Agence FrancePresse, December 1, 2000)

MONTANA RESOURCES: Employees Sue over Layoffs at Butte Mine-----------------------------------------------------------Two employees of Montana Resources are suing the company, claiming it didnot give proper notice when temporary layoffs at its copper and molybdenummine here were extended beyond six months.

Gary Lovshin and Frank Piazzola contend in their federal lawsuit that thecompany failed to comply with the federal Worker Retraining andNotification Act by not giving written notice when layoffs at the mine wereextended.

In their five-page lawsuit, the two also ask that the case be certified asa class action to include all employees of the mine.

Montana Resources had not been served with the lawsuit as of last ThursdayNovember 30, and spokesman Steve Walsh said the company would have noimmediate comment.

Lovshin and Piazzola filed their lawsuit last Tuesday November 28. Butteattorney Robert McCarthy said he is drafting a separate lawsuit on behalfof other employees.

"The act ... was designed to protect workers from being thrown out in thecold," McCarthy said. "Our legal position will be that they did not get theproper notice."

The mine, which opened in 1986, had employed about 350 people and wasButte's third largest private sector employer.

It was idled in late June after spiking electricity prices forced a halt inoperations.

The company recalled about one-third of the work force in September toresume pre-stripping chores.

However, on Nov. 17, Montana Resources said low copper prices, highelectricity costs and cold weather dashed plans to reopen the mine thiswinter. (The Associated Press State & Local Wire, December 1, 2000)

PREFERRED EQUITIES: Cleared of Charges over Betterment Fees; Sued Again-----------------------------------------------------------------------On August 27, 1998, an action was filed in Nevada District Court, County ofClark, No. A392585, by Robert and Jocelyne Henry, husband and wifeindividually and on behalf of all others similarly situated againstPreferred Equities Corporation (PEC), PEC's wholly-owned subsidiary,Central Nevada Utilities Company (CNUC), and certain other defendants.

The plaintiffs' complaint asked for class action relief claiming that PECand CNUC were guilty of collecting certain betterment fees and notproviding sewer and water lines to their property. The court determinedthat plaintiffs had not properly pursued their administrative remedies withthe Nevada Public Utilities Commission (PUC) and dismissed plaintiffs'amended complaint, without prejudice.

Notwithstanding plaintiffs' appeal of the dismissal, plaintiff filed foradministrative relief with the PUC. On November 17, 1999, the PUC foundthat CNUC, the only defendant over which the PUC has jurisdiction, was notin violation of any duties owed the plaintiffs or otherwise in violation ofCNUC's approved tariffs. Subsequent to the PUC's decision, plaintiffsvoluntarily dismissed their appeal of the trial court's order dismissingtheir case without prejudice and directing plaintiffs to exhaust theiradministrative remedies.

On May 4, 2000, plaintiffs refiled their complaint in Nevada DistrictCourt, naming all of the above parties with the exception of CNUC. Thedefendants have filed a motion to dismiss.

PEC, a wholly-owned subsidiary of Mego Financial Corp., manages timeshareproperties and receives management fees as well as fees based on sales oftimeshare interests. By providing financing to virtually all of itscustomers, PEC also originates consumer receivables that it hypothecatesand services. Mego Financial is a premier developer and operator oftimeshare properties and a provider of consumer financing to purchasers ofits timeshare intervals and land parcels through PEC.

PRESIDENTIAL ELECTION: Bush Lawyers File Response to Challenge of Vote---------------------------------------------------------------------- TALLAHASSEE, Fla. (AP) - In a new legal filing, lawyers for RepublicanGeorge W. Bush say they have more than a dozen reasons why a judge shouldtoss out Democrat Al Gore's challenge to Florida's presidential vote.

The Republicans' first formal response to the Democrats' contest claimsGore's challenge is baseless because the real election wasn't between theTexas governor and the vice president. Instead, the lawyers argue, it'sbetween the separate groups of 25 Florida electors.

The motion filed last Thursday November 30 in Leon County Circuit Courtnoted that the election in which the electors are candidates does not occuruntil Dec. 18, when the Electoral College meets to cast votes forpresident. Only electors can file contests because only electorssupporting presidential candidates are on the ballot, the motion reads.Thus, the contest is invalid because Gore has no legal grounds to call forit, it said. GOP lawyers also want to call 95 witnesses at the trial,according to party lawyers.

The Democrats countered, accusing the Bush camp of delaying the process.``They will obviously throw any procedural or technical roadblock they canat the heart of the contest, which is the counting of ballots,'' said RonKlain, Gore's senior legal adviser.

Democratic voters filed a lawsuit last Friday Martin County's canvassingboard in an attempt to throw out 9,773 absentee ballots, most of which werecast for George W. Bush. If a judge rules to disqualify all of the ballots,Democrat Al Gore would gain 2,815 votes more than enough to grab the leadand Florida's 25 electors from Bush.

In a case similar to one filed earlier in the same week against SeminoleCounty, the voters claim Republican Party officials were allowed to alterballot request forms by adding voter identification numbers to applicationsthat were left blank.

But Gary Farmer, one of the lawyers who filed the suit, said the MartinCounty situation was more serious because elections officials allowed theGOP to actually remove the request forms from the office.

A similar incident in Seaw that says only the voter, an immediate familymember or a guardian can fill out an absentee ballot application. That suitseeks to throw out all 15,000 absentee ballots cast in Seminole County. Atrial is scheduled for [the week beginning December 4].

The motion filed in Leon County is seeking a dismissal because Gore'slawyers filed their challenge after the 10-day deadline required by statelaw. The filing says that it is a ``red herring'' to argue that the FloridaSupreme Court's extension of the recount deadline gave the Gore team anymore time to file a contest.

The motion, filed with Judge N. Sanders Sauls, also states the manuallycounting only part of the ballots is illegal, and a recounting the ballotsfor the entire state ``would have dire consequences for Florida and thenation.''

The filing also seeks dismissal because the judicial recounts the Gore campis seeking are ``illegal, inappropriate, and manifestly unfair.''

Meanwhile, as hundreds of thousands of ballots were being trucked to thestate capital, Gore's lawyers implored the state Supreme Court to step inand get the votes recounted immediatelyllas counties, said Bush campaignspokesman Scott McClellan. The judge has not yet considered the request.``We believe there were a number of illegal votes for Gore in thosecounties,'' McClellan said.

While saying the Bush campaign believes that ``the manual recount isfundamentally flawed,'' McClellan said lawyers filed the motion because``if there is to be another manual recount, it should not be anotherselective one designed by and for the vice president.''

Unless the ballots are counted before Dec. 12, they said, it will be toolate. ``No legal judgment can correct any error found after the electoralvotes are cast,'' their appeal said. ``Only the judgment of history will beleft to be rendered on a system that was unable or unwilling to ascertainthe will of the voters.''

The 50-page legal brief repeatedly quoted from the justices' own decisionthat allowed vote recounts and said the right of voters to be heard wasparamount.

If votes are not recounted by the time Florida electors need to be chosenDec. 12 the briefs said, ``the resulting controversy about the legitimacyof the presidency would be destructive for our country.''

On other legal fronts:

A committee of the Republican-controlled Legislature recommended [lastThursday November 30] that a special session be called as soon as possibleso the lawmakers can step into the disputed presidential election. TheLegislature may decide to appoint its own electors to the Electoral Collegeif the issue is still unresolved by Dec. 12.

Circuit Judge Sauls held a brief hearing in which he allowed two groups ofvoters to have a limited role in the contest phase. But he deniedintervention from Judicial Watch, a conservative legal group that has beenlooking at the Palm Beach ballots.

PRESIDENTIAL ELECTION: Florida Trial on Presidential Race Nears End------------------------------------------------------------------- TALLAHASSEE (Reuters) - A lawyer for Al Gore told a court on Sundaythere are hundreds if not thousands of Florida ballots which would give theDemocrat a victory over Republican George W. Bush, and with that thepresidency of the United States, but which only a hand count can verify.

But a lawyer for the Texas governor countered that the Gore team had comeup with nothing more than speculation and two weak witnesses during anhistoric two-day trial whose testimony fell far short of what it would taketo decide the next occupant of the White House.

The exchange came in the final hours of the trial before Judge N. SandersSauls in Leon County District Court, where Gore is challenging the outcomeof the presidential election in Florida which state officials have decidedBush won by 537 votes.

Time was running out for Gore to win the recount he desperately needs.Florida is to certify its electors -- the people who actually vote forpresident under the U.S. system -- in nine days following one of theclosest presidential elections in U.S. history.

Gore is seeking a partial recount in three counties, where his lawyerscontend there are enough hidden votes to give him a win and send him to theWhite House in January.

After nearly 10 hours of proceedings on Saturday and more than that onSunday, the trial went well into the evening. There was no indication ofwhen the judge would hand down a ruling in the no-jury proceeding.

Whatever that decision is, it will be appealed to the Florida Supreme Courtby the losing side. In addition there are other pending court cases inFlorida which could impact the state's final vote total.

Machines Miss Votes

The court "has heard witnesses not called entirely by plaintiffs .. whohave told the court that in a close election a manual recount is the onlyway to be sure how certain contested ballots should be counted," DavidBoies, Gore's chief trial lawyer, said in his closing argument.

"From every piece of evidence we have, there are ballots that the machinecan't read, but which the intent of the voter can be determined by a manualreview," he added, "many, many hundred and perhaps thousands ... more thanenough to make a difference in this race."

But Barry Richard, leading Bush's trial team, said in wrapping up his casethere was no evidence that election officials in the three counties abusedtheir discretion; no evidence that the punch card voting devices questionedwere faulty and no law that says a small indention on a ballot card calleda dimple -- has to be counted as proof of the way a voter intended to casta ballot.

"There is nothing but two witnesses and speculation," he added, telling thecourt it had to ask whether a decision that could "hinge the election ofthe presidency" on the two Gore witnesses -- a statistician and a votingmachine expert.

The latter testified that there were problems with a build up of chad --the dots punched out from ballot cards -- and hardened rubber on votingdevices that could have frustrated voters.

The former suggested that votes for Gore picked up in partial manualrecounts held so far would likely be found in thousands of others that haveyet to be subjected to the same process.

The Bush team presented witnesses that disputed both claims.

The Bush team also served notice that it would ask the judge not toconsider as evidence ballots in question from heavily Democratic Miami-DadeCounty.

It said its witnesses had proven those ballots had been shuffled by handand recounted by machines so many times they could no longer prove theintent of any voter in cases where the ballots were not cleanly punched.

Expert Doubts Figures

The vice president, who had a small net gain in a partial recount ofMiami-Dade County, claims a full hand tally of some of the ballots therewould give him 600 more votes -- enough to win the state and the election.

The Bush side produced its own statistician on Sunday who said there was nostatistical basis for projecting Gore's gain in the partial count to otherprecincts -- as the expert called by the opposing side had said.

The Gore team, however, got another Bush witness, who holds a number ofpatents on voting systems and who helped develop the whole punch cardmethod in wide use, to agree that "You need either a reinspection or amanual recount" in close elections. He reasoned that holes in ballots thathave not been punched out cleanly can close when run through automatedreading systems to recount them, giving false returns.

At the same time, however, the expert -- John Ahmann of Napa, California --disputed theories offered by the Gore team that some of the devices couldbecome so clogged with chad -- the paper punches from ballot cards -- thatthe voter would be unable to punch the ballot properly with a needle-likestylus.

At stake are Florida's 25 Electoral College votes, a prize that will decidethe Nov. 7 presidential election. Facing a Dec. 12 deadline to place thestate's presidential electors, Gore wants the court to order a quickrecount of 14,000 disputed ballots in three counties -- a move he thinkscan provide him enough votes to overtake Bush's 537-vote lead.

The Republican-led Florida Legislature was considering a special session toappoint the electors, but that was up in the air. Florida House Speaker TomFeeney wanted to reach an agreement to call such a session, but SenatePresident John McKay urged caution, indicating he would not be rushed intoa decision.

Bartlit, a partner at the Chicago firm of Bartlit Beck Herman Palenchar &Scott and a veteran corporate litigator, was introduced as a member ofBush's expanded legal team at a Tallahassee press conference last TuesdayNovember 28.

Bartlit immediately set about rebutting Democratic arguments that theMiami-Dade County hand recount was halted because the county canvassingboard was intimidated by Republican protesters. He told the assembled pressthat the board stopped the recount because it couldn't meet the deadlineimposed by the Florida Supreme Court.

As counsel for the Bush campaign, the 68-year-old Bartlit is part of aneight-member legal team that includes former Secretary of State James A.Baker.

Alone at Defense Table

But nearly eight years ago, Bartlit was the only lawyer at the defensetable in a Fulton State Court courtroom when a Georgia jury delivered astinging rebuke to his client: a $105.24 million verdict against GeneralMotors.

On the winning side were Tom and Elaine Moseley, parents of a 17-year-oldwho died in a fiery explosion in his 1985 GMC pickup. A drunk driverslammed into Shannon C. Moseley's truck and the pickup's side-saddle fueltank caught fire.

The case became anything but a typical vehicle accident case. WithGeorgia's best-known plaintiff's firm, Butler, Wooten, Overby & Cheeley(now Butler, Wooten, Overby, Fryhofer, Daughtery & Sullivan) as theirlawyers, the Moseleys alleged that the company had deliberately ignoredevidence that the design of its side-saddle tanks was dangerously flawed.They said the company had chosen profits over safety.

Bartlit, a West Point engineering graduate, a former Army Ranger and, atthe time, a partner with Chicago's Kirkland & Ellis, entered the Moseleycase at the 11th hour, just a few weeks before trial and long after theautomaker and its lawyers at King & Spalding had already sufferedsignificant and embarrassing setbacks in discovery.

GM's then-chairman Robert C. Stempel had to sit for a deposition for theButler, Wooten lawyers, something he had previously avoided in otherproduct liability cases. And GM's lawyers had been unable to limit thescope of discovery or to stop the plaintiffs' lawyers from getting accessto reams of once-confidential GM documents.

Nor could they stop former GM employee Ronald Elwell from telling a juryfor the first time about previously undisclosed crash tests in which GM'sfuel tanks had consistently split open.

GM at the time told American Lawyer magazine the company brought in Bartlitbecause it "wanted its most seasoned, big-case trial lawyer in anemotion-charged case."

Bartlit had been doing regular defense work for GM for 20 years when hefiled his entry of appearance in Moseley in December 1992. But this trialwas unlike any other GM had faced up to that point.

When the trial opened, it became evident that Bartlit faced a virtualcrusade led by plaintiffs' counsel James E. Butler Jr. and Robert Cheeley.

Still, Bartlit insisted on trying the case as a typical vehicle accidentsuit. Clad in Italian suits that became soiled as he repeatedly hoistedaloft the scorched gas tank from Moseley's truck, Bartlit insisted thatGM's trucks were safe and that Moseley had died, not from the fire, butfrom the impact of the collision.

After the liability portion of the trial, the jury awarded the plaintiffsmore than $4 million in compensatory damages and indicated they intended toaward punitive damages. Butler, invoking Scripture, asked the jury to award$100 million.

Bartlit tried to tell the panel that GM had received the message. "It is acrushing blow that you've delivered us. We accept it," he told the jury.

An hour later, jurors awarded the plaintiffs $101 million, the extramillion added, five panel members told American Lawyer magazine, as anexclamation point.

Bartlit was alone at the defense table to accept the jury's rebuke.

The Moseley verdict was overturned on appeal. The case later settled for aconfidential amount prior to a retrial. (Fulton County Daily Report,November 30, 2000)

PRESIDENTIAL ELECTION: The New York Times Reports on Court Scene----------------------------------------------------------------So dazzling, numerous and expensive are the legal talents deployed here andin Washington that it seems the only thing missing from the fight for thepresidency is for Abe Lincoln and Clarence Darrow to rise from the graveand choose up sides.

No one can provide exact counts, but the many versions of this struggle,playing out in state courts, federal courts, trial courts and appealscourts, have employed more than 100 lawyers, including some of the nation'sbest and best known, rolling up millions of dollars in fees in just threeweeks.

Doug Hattaway, a spokesman for Vice President Al Gore, estimated that 30lawyers were working for Mr. Gore on the election cases here, in SouthFlorida and in Washington.

"We're calling it the fastest-growing law firm in Florida," Mr. Hattawaysaid.

Gov. George W. Bush has "probably fewer than 20" lawyers working for him,said Dan Bartlett, a spokesman.

Abundant as they are, some litigators are actually stretched thin by theoverlapping election disputes, including five major cases or groups ofcases, along with related appeals and assorted minor actions. Famouslawyers can be seen hurrying down the sidewalks of this city, fromcourthouse to courthouse to news conference, looking even more haggard thanthe reporters chasing them.

There is Mr. Gore's lawsuit contesting the certification of Mr. Bush as thewinner in Florida; Mr. Bush's appeal to the United States Supreme Court ofa ruling by the State Supreme Court, with a hearing set for December 1; Mr.Bush's suits against several counties over the counting of overseasballots; a suit by private citizens challenging the validity of thousandsof absentee ballots in Seminole County; and two citizen suits challengingthe legality of Palm Beach County's "butterfly" ballot.

"We've got a major election contest that Mr. Gore's legal team has asked tobe placed on a fast track before Judge Sauls; we have an argument beforethe United States Supreme Court on Friday [December 1]; we have an actiontaking place in Palm Beach," Barry Richard, Mr. Bush's chief trial lawyerhere, said in court, venting his frustration. "And we have several othercases pending. And while it may appear that I have an unlimited resource oflawyers, I do not. And what's more, there has to be somebody to keepsupervision of all of this, and that task has fallen to me."

Both campaigns have set up committees to collect money for thepost-election battle, and while neither has reported income or expenses,officials on each side report raising several million dollars. Much of thatwill go toward legal fees, despite the fact that many of the biggest names,like David Boies for Mr. Gore and Theodore B. Olson for Mr. Bush, areworking without pay.

Mr. Gore's legal team for all of the Florida cases is headed by Mr. Boies,labeled 14 years ago by The American Lawyer magazine "the most sought-aftertrial lawyer in America," a claim that has only gotten stronger. Hisrat-a-tat speaking style, punctuated by chopping hand motions, accompaniesa daunting memory that allows him to cite page and line numbers from thickrulings.

Though famously indifferent to his appearance, Mr. Boies has emerged notonly as the vice president's chief litigator, but his chief media spokesmanas well, eclipsing former Secretary of State Warren Christopher, who hashelped map out the overall legal strategy. At Mr. Boies's side has beenDexter Douglass, a longtime fixture among Florida's top litigators who waschief counsel to former Gov. Lawton Chiles of Florida.

Coordinating and arguing the Florida cases for Mr. Bush is Mr. Richard,another of Florida's best-known lawyers, who cuts an elegant figure with asweep of white hair and a calm, almost conversational courtroom style, evenin heated exchanges. The other leaders of the Bush team here are FredBartlit and G. Irvin Terrell, both nationally known trial lawyers, and, inthe Seminole County case, B. Daryl Bristow.

In the United States Supreme Court case, Mr. Bush is represented by a groupled by Mr. Olson, Michael Carvin and Benjamin L. Ginsberg, chief counsel tothe Bush campaign. Mr. Gore's main advocates for that case are Laurence H.Tribe, the Harvard Law School professor and author, and Teresa WynnRoseborough.

Each political party, the State of Florida, each of the roughly 20 countiesinvolved in election suits, and each of the citizen plaintiffs, also hasmultiple lawyers involved in the election cases, some of whom are alsostars in their field.

The lineup of lawyers, whose resumes include some of the major cases of thelast generation, seems like a game of six degrees of separation.

Mr. Terrell, representing Pennzoil, won a record $10.5 billion judgmentagainst Texaco in 1985. Mr. Boies represented Texaco on appeal. In 1993,Mr. Boies represented Continental Airlines in an unsuccessful antitrustlawsuit against American Airlines, represented by Mr. Terrell. Mr. Boiesand Mr. Christopher were among the lawyers who defended IBM against along-running government antitrust suit.

Mr. Boies is best known as the government's main advocate in the successfulantitrust case against Microsoft, and as the lawyer who defeated Gen.William C. Westmoreland's libel suit against CBS in 1984. He representsNapster in the case against it by the music industry.

Mr. Olson won a 1994 ruling that forced the University of Texas to endrace-based admissions, a case that pitted him against Mr. Tribe, whorepresented the state in an unsuccessful appeal. A close friend of KennethW. Starr, Mr. Olson played a peripheral role in the Whitewater and PaulaJones cases that led to the impeachment of President Clinton.

He also represented President Ronald Reagan in the Iran-contrainvestigation. Mr. Tribe, in turn, represented the Iran-contra specialprosecutor, Lawrence M. Walsh, in a 1988 Supreme Court case that grew outof a different special prosecutor's investigation. The subject of thatinvestigation? Mr. Olson, then a top Justice Department official. (The NewYork Times, December 1, 2000)

PRESIDENTIAL ELECTION: U.S. Supreme Court Session Convened on December 1------------------------------------------------------------------------ WASHINGTON (Reuters) - The U.S. Supreme Court intervened for the firsttime in a presidential election last Friday December 1. Lawyers for bothpresidential candidates said the U.S. Supreme Court could rule in the casein [about half a week’s time].

The state certified Bush as the winner by 537 votes last Sunday, meaningthat he will become president in January unless a court overturns thatdecision.

In the latest chapter of the battle, a white truck loaded with 82 cardboardboxes packed with 654,000 ballots, which Gore believes may hold the key tohis possible victory in Florida, pulled out of downtown Miami just beforedawn and arrived at a courthouse in Tallahassee about nine hours laterafter a 520-mile (837-km) journey north.

Those ballots may or not be recounted, depending on rulings by courts inFlorida. The state's Supreme Court last Friday December 1 rejected a motionfrom Gore to begin a recount immediately. The court left jurisdiction inthe hands of a county judge, who will hear arguments about whether theballots should be counted again on Saturday.

Democratic spokesman Doug Hattaway said of the Florida Supreme Courtdecision not to expedite the recount, ``We're obviously disappointed.'' Buthe was encouraged the trial judge planned to move quickly on the case.Hattaway said he ``indicated the court would try to get a hearing done in aday,'' on Saturday -- which could mean a decision on the recount soonerrather than later.

The Florida Supreme Court also unanimously rejected a motion from citizensin Palm Beach County who objected to the ''butterfly ballot'' used in thecounty and asked for a new election. The petitioners said the ballot wasconfusing and led many voters, who had wanted to back Gore, to cast votesfor Reform Party candidate Pat Buchanan by mistake. But the court held thiswas not sufficient reason to void the election.

In Washington, the nine black-robed members of the Supreme Court vigorouslyquestioned attorneys for both sides. Seven of the justices were appointedby Republicans and two by Democrats, but the court has often been closelydivided with a narrow conservative majority.

Bush's lawyer, Theodore Olson, argued that the Florida Supreme Courtexceeded its authority when it ruled unanimously two weeks ago to extend adeadline for presidential votes to be counted by hand in Florida -- thestate that will decide who won the Nov. 7 election.

As a result of that ruling, Bush's margin in Florida fell from 930 to 537votes. If the Supreme Court found for Bush, the previous result would bereinstated, making Gore's task in trying to overtake his rival muchtougher.

At stake are Florida's 25 Electoral College votes, which have given Bushone more than the 270 needed to be elected president. Gore is challengingthat finding in Florida court cases to be heard in the coming days. If hegot the 25 votes, then Gore would become president.

Justices Question Ruling

Gore's lawyer, Laurence Tribe, argued that the Florida court ruling ensuredthat all the votes would count. But two justices expressed concerns.

``I don't see anything in the text of the statute that requires a manualrecount,'' Justice Antonin Scalia said.

Justice Sandra Day O'Connor said the ruling pushed back the deadline forcertifying the Florida vote. ``Certainly the date changed. That is adramatic change,'' she said.

Other justices questioned why the federal court should become involved inwhat is usually a state matter.

There were nearly 400 people in the courtroom, including Gore's fourchildren, his top campaign aide, William Daley, and a slew of Republicanand Democratic members of Congress.

The justices did not say how they would rule. After the 90-minute hearing,the court took the case under advisement.

Speaking on CNN's ``Larry King Live,'' Tribe and Olson agreed their couldbe a decision early [the week beginning December 4], noting the speed withwhich the High Court had acted thus far.

``I wouldn't be surprised if it was before the middle of next week. Itcould even be Monday,'' Tribe said, quickly noting he could be wrong in hisguess.

Olson said later on the same program that he also ``would not besurprised'' if the ruling came before mid-week.

Tribe told reporters after the hearing that he was encouraged but cautious.``You can't always guess anything about where the justices will come outfrom what exactly they ask,'' he said.

A ruling for Gore would boost the vice president in his monumental battleto overturn last Sunday's Florida's certification of a Bush victory in thestate.

But Gore has a tough road ahead in any case since he faces a Dec. 12deadline to overturn Bush's certified win before the state'srepresentatives to the Electoral College must be chosen. Florida's electorswill tip the balance when the Electoral College meets on Dec. 18 to selectthe 43rd president of the United States.

Legal Maelstrom

The inconclusive U.S. election has provoked a political and legal maelstromin which [last Friday December 1's] U.S. Supreme Court hearing was the mostdramatic, but possibly not the most decisive.

In the legal blizzard, one potentially pivotal case will be heard byFlorida's Leon County Circuit Court on Monday December 4. The lawsuit seeksto throw out up to 15,000 Seminole County absentee ballots on the groundsthat Republican Party workers illegally altered absentee ballotapplications, most of which were presumed to have been cast for Bush.

Also on Friday [December 1], a second similar lawsuit was filed in Floridaby a Democratic voter seeking to disqualify 9,800 absentee ballots cast inRepublican-leaning Martin County.

Gore's lawyers fought for a quick recount of contested votes in Florida[last Thursday November 30], but Republican state lawmakers acted tooutflank them, voting to call a special legislative session to help propelBush into the White House.

Tribe in written submissions to the Supreme Court complained that Bush``seeks not just to run out the clock but, extraordinarily, to have thiscourt turn back the clock in pending Florida contest proceedings so that hecan declare the game over.''

Olson warned that chaos would result if state courts could change the lawafter an election was held. He blamed the Florida Supreme Court forcreating ``turmoil'' and ``postelection chaos.''

The Clinton administration agreed on Friday [December 1] to performbackground checks on candidates for top-level jobs in both the prospectiveadministrations of Bush and Gore.

White House spokesman Jake Siewert said the agreement emerged fromdiscussions that White House Chief of Staff John Podesta held with Bush'schief of staff, Andrew Card, and Gore's transition chief, Roy Neel.

Meanwhile, the Central Intelligence Agency has representatives in Austin,Texas, preparing to begin giving the Bush campaign regular intelligencebriefings early [the week beginning December 4], said White House NationalSecurity Council spokesman P.J. Crowley. Gore already gets nationalsecurity briefings through his position as vice president.

PROTECTION ONE: Schubert & Reed Issues Notice of Pendency of Action-------------------------------------------------------------------Pursuant to Section 21D(a)(3)(A)(i) of the Securities Exchange Act of 1934(15 U.S.C. Section 78u-4(a)(3)(A)(i)), and the November 13, 2000 Order ofthe United States District Court for the Central District of California inCats, et al. v. Protection One, Inc., et al., Case No. CV 99-3755 DT (Rcx),notice is given that a class action is pending in the United StatesDistrict Court for the Central District of California, in which claims areasserted on behalf all persons or entities who purchased or otherwiseacquired Protection One Alarm Monitoring, Inc. ("POAM") 7-3/8% Senior NotesDue 2005 ("the Senior Notes") and POAM 6-3/4% Convertible SeniorSubordinated Notes Due 2003 ("the Convertible Notes") from February 10,1998 through November 12, 1999 ("the Class Period").

The complaint asserts claims under sections 11 and 15 of the Securities Actof 1933 (15 U.S.C. Sections 77k and 77o) on behalf of persons or entitieswhich acquired the Senior Notes whose purchases are traceable to POAM'sDecember 11, 1998 Registration Statement on Form S-4. The complaint allegesthat defendants sold the Senior Notes pursuant to a registration statementthat contained untrue statements of material facts or omitted to statematerial facts required to be stated therein or necessary to make thestatements therein not misleading. Particularly, the complaint alleges thatthe registration statement contained untrue statements concerningProtection One's financial results and operations for fiscal 1997 andfiscal 1998. Plaintiffs allege that, as a result of these materialrepresentations, the Senior Notes were sold to the public at inflatedprices and traded at inflated prices thereafter.

Additionally, the complaint asserts claims under sections 10(b) and 20(a)of the Securities Exchange Act of 1934 (15 U.S.C. 78j(b) and 78t(a)) andRule 10b-5 (17 C.F.R. Section 240.10b-5), promulgated thereunder by theSecurities and Exchange Commission ("SEC"), on behalf of purchasers of theSenior Notes and the Convertible Notes during the Class Period. Theseclaims allege that defendants intentionally or with deliberate recklessnessmisrepresented the truth about Protection One, its finances, revenues,gross margins and future business prospects. In particular, the complaintalleges that defendants intentionally or with deliberate recklessnessmisrepresented the Company's financial results and operations for fiscal1997, fiscal 1998 and the first two fiscal quarters of 1999, and that, as aresult of these material misrepresentations, POAM debt securities traded atinflated prices during the Class Period.

Plaintiffs' claims arise from two restatements of prior reported financialresults by the Company, as well as reports of an ongoing SEC investigationinto the Company's accounting practices, which the Company has disclosedare believed by the SEC to have resulted in material errors in theCompany's reported results and restated results. The first restatement wasannounced April 1, 1999, and the second restatement was announced November12, 1999.

RENT-WAY, INC: Shareholders Have Until January 2, 2001 to Seek Lead Role------------------------------------------------------------------------According to Pomerantz Haudek Block Grossman & Gross LLP(http://www.pomerantzlaw.com),which has filed a class action lawsuit against Rent-Way, Inc. (NYSE: RWY) and four of the Company's seniorexecutives on behalf of all those persons or entities who purchased thecommon stock of Rent-Way during the period between January 18, throughOctober 27, 2000, inclusive (the "Class Period"), shareholders have untilTuesday January 2, 2001 to seek appointment by the Court as one of the leadplaintiffs in this action.

The lawsuit charges that during the Class Period, Rent-Way allegedly issuedmaterially false and misleading financial statements concerning thefinancial condition of the Company and the nature of its billing,collection and accounting problems. In particular, it is alleged that theCompany misstated earnings and net income by under-reporting expensesduring the Class Period.

SOTHEBY'S: 2 Tycoons Waged Titanic Battle For Control-----------------------------------------------------On a Sunday afternoon in April, two days after returning from a trip toLondon, Detroit shopping-center developer Robert Taubman flew to New YorkCity to see money manager Ron Baron. Taubman had just been nominated as adirector of Sotheby's Holdings, the 256-year-old art auction housecontrolled by his father, Alfred Taubman. Baron, Sotheby's largestshareholder, wasn't happy.

It didn't take long for the shouting to begin. Five minutes after Taubmanarrived at Baron's Park Avenue duplex, Baron ordered him to leave. Thescreaming was so loud, say sources close to the combatants, that Baron'swife, Judy, lounging upstairs, thought it sounded as if someone were beingbadly beaten.

The scrappy, voluble Baron and the dour, linebacker-sized Taubman simmereddown enough to exchange accusations. Baron bellowed that an outrageousprice-fixing conspiracy had flourished on Alfred Taubman's watch and thatthe older Taubman had no right to keep control of the auction house. It was"horrible," Baron yelled, that after Sotheby's had forced Al Taubman offthe board in February, he had the gall to name his son as a director.

Taubman fired back that Baron should stop moaning, that he always knew therisks of investing in a company with special shares that enabled theTaubmans to control the board. The Fords of Ford Motor and the Sulzbergersof the New York Times used their privileged stock to ensure that thosegreat names remained in their hands. The Fords had no intention ofrelinquishing those rights, Taubman roared, and neither did his family.Baron's demands, he charged, were nothing more than a brazen grab forcontrol.

That was the last time the two men talked. Since then they have engaged ina titanic--and until now largely untold--battle to shape the destiny of thestoried auction house. Much has been written about the circumstances thatled up to the Park Avenue showdown and the events that unfolded afterward:the price-fixing by Sotheby's and Christie's, which between them controlled90% of the $ 4 billion auction market; the forced resignations of Sotheby'schairman, Alfred Taubman, and brassy chief executive, Diana Brooks; theproposed $ 512 million settlement of a class-action lawsuit brought by100,000 victims of the commission-rigging scheme; and Brooks' agreementwith federal prosecutors to plead guilty in exchange for testimony againsther former boss, who is still the target of a criminal investigation.

But in focusing on the legal cases, the media missed the drama that tookplace behind the velvet curtains--in the Sotheby's boardroom, in thehigh-stakes negotiations with plaintiffs attorney David Boies, and in theprivate machinations between the Baron and Taubman factions. The cast ofcharacters included a shrink (Sotheby's board member and former Moviefonechairman Dr. Henry Jarecki), a media baron (Conrad Black), and a92-year-old oilman (Max Fisher). Even Warren Buffett played a role. Indeed,the story of how Sotheby's was saved from financial ruin, pieced togetherby FORTUNE from interviews with directors and other insiders, none of whomwanted to be named, may turn out to be not only more fascinating but ofmore lasting significance.

When the price-fixing scandal broke in January and Sotheby's stockplummeted, the biggest loser was the company's largest shareholder, RonBaron. But the turmoil also provided Baron with an opening: It was hischance to end Taubman's privileged status at Sotheby's and take charge ofthe company himself. Baron, 57, is a blithe spirit with a highly originalapproach to investing. Unlike Taubman, a 75-year-old shopping-centerdeveloper whose taste runs from blue bloods to Old Masters, Baron preferspop art, baseball memorabilia, rock & roll, and old buddies from his daysat New Jersey's Asbury Park High School. His office overlooking CentralPark is adorned with Roy Lichtenstein prints and the 1920 contract thatsent Babe Ruth from the Boston Red Sox to the New York Yankees. At aconference in October for investors in his Baron Capital funds, Baronprovided a surprise treat--a performance by one of his heroes, NeilDiamond. And he sang along as Diamond crooned, "Money talks, but it don'tsing and dance "

As an investor, Baron is the Warren Buffett of small- and mid-cap stocks.Baron Capital's mutual funds have provided excellent returns by findingoverlooked companies Baron believes have enormous growth potential, thenholding on to them as they get big. Some of his discoveries include CharlesSchwab, telecommunications equipment maker Flextronics, and the employmentagency Robert Half.

Baron started buying Sotheby's stock in 1998. He thought the company wasundervalued and could flourish if it harnessed its auction business to theInternet. Baron immediately began lobbying Brooks and Taubman to selllower-priced goods on the Web, where costs are far less than at liveauctions and Sotheby's could swell its revenues by handling large volumesof paintings, porcelain, and rugs. Though the results so far aren'tparticularly promising, Baron remains convinced that Sotheby's can findsignificant future growth in cyberspace. "With the help of the Net,Sotheby's can raise its revenues from $ 400 million to $ 3 billion in tenyears," Baron says, pacing the Persian rugs in his office in ostrich-hideshoes. "That could multiply the stock price tenfold."

By the end of last year Baron had poured about $ 500 million intoSotheby's, at an average price of $ 20 per share--5% of his funds' $ 9billion in assets--giving him a 41% stake in the company. His admirationfor Taubman buoyed his confidence. "He's a retailing genius who could gointo a department store, open the drawers to check the inventory, and tellyou if it was well managed or not," says Baron. He marveled, for example,that Taubman had installed giant elevators in Sotheby's newly refurbishedbuilding on Manhattan's Upper East Side, elevators big enough for trucks tohaul in entire estates. And, he says, Taubman had reassured him thatdespite the two classes of shares, he wouldn't be treated as a second-classowner. "I'll treat your shares exactly the same as mine," Baron saysTaubman told him before he started his buying binge.

By contrast, Taubman had acquired his controlling stake in Sotheby's for amere $ 37 million in 1983, when it was on the verge of collapse. When hetook it public four years later, he followed the example of his longtimefriend Henry Ford II: He established a special class of B shares--"killerB's" to Sotheby's insiders--that gave him extra voting rights andguaranteed him sovereignty.

That put Baron in a weaker position than Taubman, even though he ownsnearly twice as much stock. He can choose only a quarter of the board's 16members, while Taubman gets to name the rest. To most investors, the killerB's and the regular A shares look the same; both are selling at about $ 22a share. But because the class B shares pack extra power, an acquirer couldhave taken full control of Sotheby's--its board, strategy,everything--simply by buying Taubman's 22% stake. (Sotheby's board has theright to match any offer by finding another buyer or purchasing the sharesitself for the same price.) The prospective buyer would have to pay Taubmana premium of 15% to 20% for his shares. Regular stockholders, like Baron,would watch Sotheby's change hands without getting the fat markup in shareprice that normally sweetens a takeover for all the owners.

Until the scandal broke, Taubman's killer B's didn't bother Baron. But whenthe stock dropped from $ 30 to around $ 15 in the wake of the price-fixingallegations, he began to fret. He feared that by stacking the board withcronies, including his own son, Taubman could engineer a settlement thatprotected his own pocketbook at the expense of Sotheby's. And that Baronwould be left holding a huge stake in a wounded company.

The screaming match with Robert Taubman confirmed Baron's worst fears.Whatever assurances Baron thought he had from the older Taubman were nowoff the table: "He said his interest is better than my interest," Baronrecalls. So Baron started a guerrilla campaign against the Taubmans. Forthe first time, he exercised his right to name directors. And he lobbiedthe board with an intriguing plan to save Sotheby's from huge damages,proposing that Taubman pay all or most of the fines in the class-actionlawsuit by changing his B shares into regular shares, then distributingthem to the plaintiffs. Besides reviving the value of Sotheby's stock, theplan, by eliminating the killer B's, would make Baron Capital the company'scontrolling shareholder.

That set the stage for a dramatic eight-hour board meeting in New York Cityon Aug. 3. For some of the directors, it was the first time they had laideyes on Sotheby's recently expanded glass cathedral, a building that hadTaubman's name written all over it--in the soaring auction room framed withskyboxes, where the likes of Billy Crystal get to bid in private; in thetop-floor gallery that bathes van Goghs in glorious natural light; and inthe boardroom itself, decorated with the sunsets and gardens of ChildeHassam and other American impressionists. But Taubman himself was nowhereto be seen: He was off fly-fishing for salmon in Iceland.

The Sotheby's directors who sat around the blond-wood conference tablecontemplating the company's fate had a different cast from previous boards.In the past Taubman had chosen a combination of British aristocrats withlittle management experience and personal friends who happened to belawyers or businessmen. Now the board was loaded with feisty entrepreneurs.Baron had picked the chairmen of two companies he had invested in--StevenDodge of wireless-equipment maker American Tower and George Blumenthal ofNTL, the British communications giant--as well as money manager BrianPosner and former Moviefone chairman Henry Jarecki, who also teachespsychiatry at Yale. Jokes Baron: "Having a shrink on the board sure can'thurt Sotheby's."

The Taubman-appointed directors included some old friends, such as Canadianmedia mogul Conrad Black, longtime attorney Jeffrey Miro, and Max Fisher,the Michigan oilman who had given Taubman his first big break in the early1950s, commissioning him to build or renovate 153 gas stations. Lending anair of statesmanship was the new chairman, Michael Sovern, a formerpresident of Columbia University. (Miro and Robert Taubman recusedthemselves from all discussions about a settlement.)

Sovern explained to the board--and the directors agreed-- that Sotheby'shad two objectives. First, it had to settle quickly. The legal cloud wasdiscouraging collectors from selling their art through Sotheby's. Employeeswere leaving in droves, lured by smaller competitors like Phillips,recently purchased by French luxury-goods purveyor LVMH. Even a few monthsof crippling lawsuits could wreck the auction house's business.

Second, Sotheby's had to settle for an amount it could afford. It hadinvested $ 191 million to expand its headquarters and start an Internetbusiness, and the Web venture would burn a lot more cash before it gottraction. In management's estimation, Sotheby's couldn't afford to pay morethan $ 100 million without seriously damaging its financial health.

But the stakes were much higher than that. Sotheby's lawyers told thedirectors that David Boies, the attorney spearheading the class-actionsuits, estimated the damages--excessive commissions charged to both buyersand sellers as a result of the price-fixing scheme--at $ 285 million. Sinceplaintiffs in antitrust cases can demand treble damages, Boies planned topursue the auction houses for more than $ 850 million. The lawyer who hadhumbled Microsoft had a strong incentive to win big: A federal judge in NewYork, Sovern told the board, had approved a deal giving Boies' firm 25% ofany damages over $ 400 million.

Some of the Baron-appointed directors, including Jarecki, favored havingTaubman pay any settlement by surrendering his special shares. ButSotheby's lawyers explained that because the B shares were enshrined inSotheby's charter, even the board couldn't force Taubman to relinquishthem. The partisans quickly dropped the idea and didn't push for a lawsuitthat might have forced Taubman's hand. "The Baron-appointed directors,"says one board member, "proved far more independent than he ever imagined."

In most antitrust cases, the co-conspirators agree to cooperate so that theplaintiffs can't play one side against the other to swell the settlement.But the contempt between Sotheby's and Christie's was so great that theyrefused to align their strategies or even talk. That freed Boies to exploittheir mutual distrust. He could settle with either Sotheby's or Christie'sfor a relatively small amount, then, with the house that settled firstproviding damning evidence against the other, chase its haplessco-conspirator for a bigger sum. Boies, Sotheby's lawyers told the board,was prepared to make just such a deal with Christie's.

By the time the directors left at 7 P.M., they were alarmed. "There was afeeling that Christie's had far deeper pockets than Sotheby's," says onedirector, "so that Christie's could afford to settle first and start alawsuit that could ruin us."

Over the next seven weeks Sotheby's, Christie's, and Taubman bulled andparried their way through whirlwind negotiations. For Sotheby's, the onlyescape was to get Taubman to make a huge payment--the option Baron hadproposed, except Taubman would pay in cash instead of stock. If he refused,Sotheby's couldn't afford to settle before Christie's, leaving itvulnerable to protracted suits and a ruinous settlement.

Taubman wasn't offering much cash. But Sotheby's had leverage: It could sueTaubman to recover part or all of any damages. In late August, Boiesproposed the deal that got Taubman moving. He said he would accept a $ 100million settlement from Sotheby's. The auction house would then let Boiessue Taubman instead of having Sotheby's file suit against its formerchairman. The plaintiffs would get the first $ 130 million indamages--assuming Boies could prove Taubman's involvement in theprice-fixing scandal--and anything more than $ 130 million would be splitwith Sotheby's.

The board rejected the deal. But at the same time the directors sent astrong message to Taubman: Unless he stepped forward, Sotheby's wouldsettle separately and leave its former chairman standing alone.

It was Max Fisher who helped orchestrate the final deal. The revered elderhad always been a hands-on director. He insisted that lower-level employeesget bigger percentage raises than executives, and he scoured expenseaccounts for frivolous spending. "He has a bear trap for a brain and smellsb.s. a mile away," says one director. "He had an amazing way of guessingwhat the opposition was doing." At board meetings Fisher would occasionallylean forward and close his eyes, creating the impression that he wassleeping. "Trust me, he wasn't napping," the director says. "Max was justpacing himself." What Fisher wanted to know was why Sotheby's wasn'ttalking to Christie's. He told the board it had to bury its mistrust forits rival and reach a settlement. "Max kept insisting that Boies was tryingto keep the two sides apart," recalls a director. "It didn't make sense toMax that Christie's wouldn't work with us on the settlement. And he wasright."

Boies continued to play hardball. In mid-September, telling each auctionhouse that the other was the real villain, he offered a new deal to bothSotheby's and Christie's: Settle for $ 212 million and help him win evenmore money from the other side. The message was simple--whoever settles thecase first gets a big discount.

Sotheby's wanted to take the deal, but as Fisher and other members of theboard predicted, so did Christie's, and they couldn't both get it. Fearingan impasse that would force Boies to sue both houses, Fisher proposed thatSotheby's and Christie's split the difference. On Sept. 24, each agreed topay $ 256 million in damages. And Taubman promised to underwrite the lion'sshare of the settlement himself--$ 156 million. It was a supreme irony thatthe rival auction houses, which came to grief by secretly colluding to fixcommissions, only managed to escape disaster by joining hands.

Taubman's decision to finance the settlement wasn't an easy one. He wasworried that the huge payment might be perceived as an admission of guilt.But he was convinced that it made excellent economic sense. Sotheby's willhave to pay only $ 50 million in cash. The other $ 50 million will bedistributed to plaintiffs in the form of coupons that can be used to reducecommissions on art sold at Sotheby's, thereby binding the collectors to thevery house that fleeced them in the first place. Sotheby's will also pay a$ 45 million criminal fine over five years, with no interest, and issue $40 million in new stock to help settle shareholders' suits. (Taubman iscontributing an additional $ 30 million toward the latter settlement.) Inthe weeks following the settlement of the class-action suit--which is stillpending final approval by a federal judge--Sotheby's share price jumped30%, to $ 27 a share, swelling the value of Taubman's holdings by $ 90million, about half the amount he agreed to pay. (It has since fallen backto about $ 22.)

As for Baron, the directors he appointed helped persuade him not to sueTaubman to force him to eliminate the B shares. "I would hope Ron ispersuaded not to prolong the agony of the company in which he's a majorshareholder," says one board member. Baron also got advice from one of hisheroes, Warren Buffett. The Oracle of Omaha told Baron it's always betterto avoid being consumed by litigation, such as the legal confrontationchewing up so much of Bill Gates' time at Microsoft.

Baron's fears that Taubman will make a deal at his expense are receding.Doing the wrong thing in the eyes of the Justice Department--achieving abig gain to the detriment of other shareholders--could hurt Taubman'schances of escaping indictment. Plus the directors hate the idea. "Taubmanwould have to be brain dead to try to pull off something like that," saysone board member. "He may have already injured the company. He's in noposition to get incremental compensation. He'd meet all kinds ofresistance."

How did Sotheby's get itself into such a mess? For 17 years Taubmanexercised complete sovereignty over the auction house. He revolutionizedits business, promoting customer service over snobbery, transformingSotheby's from an elitist club into an emporium for the new-money masses,bringing buzz to the auctioning of rugs, paintings, and jewelry. In theprocess he transformed himself--from a shopping-mall maven, the son of aGerman-Jewish immigrant whose construction business collapsed during theDepression, into the monarch of a glamorous kingdom. He decorated hismansions in Palm Beach and Southampton, N.Y., with paintings by Degas andPollock. He palled around with celebrities and tycoons.

Taubman was a brilliant thinker, but he wasn't much of a manager. He neverfired anyone, hated making tough decisions, and detested saying no. He alsohad a terrible temper. He often called Sotheby's officials, but it wasseldom to talk about budgets or earnings. Instead he would rant aboutsomething his wife had told him--that Christie's had captured a collectionfrom Sotheby's, that Christie's salespeople attended more cocktail parties.

Innovative ideas clearly weren't enough to keep Sotheby's thriving. Taubmanneeded someone who could implement his ideas, a decisive, hands-on operatorwith the strengths he lacked. He found her in Dede Brooks, a jocular,magnetic, self-confident woman, nearly six feet tall, who grew up on LongIsland's tony North Shore and left Citibank in 1979 to work at the auctionhouse. Friends say Taubman was cowed by strong women--among them his secondwife, Judy Mazor, a former Israeli beauty queen 22 years his junior--and hewas no match for Brooks. He allowed her to run Sotheby's largely unchecked,and former employees say the chairman's proxy made her arrogant. Whether ornot Taubman told Brooks to fix prices, as prosecutors suspect, it's likelythat her hubris encouraged her to act above the law.

Brooks made no effort to emulate the muted sophistication of most Sotheby'swomen, sporting canary-yellow or magenta suits, a leonine coif, andpolitically incorrrect fur coats. She treated Taubman like one of hisbuddies would. "Hiya, boss!" she'd intone in a loud basso, slapping thechairman on the back. Her style captivated Taubman. In 1994, when CEOMichael Ainslie retired, Brooks was named to succeed him.

At first, associates say, Brooks was a compassionate, sensitive boss. Butas her power grew, a dark side emerged. She wanted to run every part ofSotheby's, regardless of whom she crushed. Until the mid-1990s a team ofexperts negotiated the terms of sale with wealthy clients seeking toauction famous works. Brooks took over their roles, hammering out all theimportant deals herself. "I enjoyed working with her until she essentiallytook over my job," recalls David Nash, former head of Sotheby's departmentof impressionist and modern art. "After that I didn't enjoy it." Nash quit,as did his wife, contemporary art expert Lucy Mitchell-Innes, and a numberof other experts.

Brooks appointed herself Sotheby's head auctioneer. Her booming,unmodulated voice and stiff manner generated little excitement and didn'thelp sales. But she consolidated her power, getting practically anythingshe wanted from Taubman, including a grant of 850,000 stock options in1998, six times what any other manager received. The award infuriatedexecutives, yet Taubman barely heard their complaints. Dede, and Dedealone, ran the business. She ignored Taubman's comments in meetings, oftenrolling her eyes. But the boss didn't complain. Brooks had becomeindispensable.

The conspiracy to fix prices began in 1995, when a dreadful market createdthe temptation to cheat. With Sotheby's and Christie's desperate for worksof art, sellers played the two houses against each other, drivingcommissions down to 2% or even lower. "Marketing expenses ate up ourrevenues," recalls Robert Monk, a former head of contemporary art at theauction house. "We were making almost no money."

In early 1995, Brooks made a dramatic presentation to the board. Sheproposed that Sotheby's change its commission structure from a flat to asliding scale: Sellers would pay Sotheby's 10% to auction a $ 10,000highboy and just 2% on a $ 5 million Matisse. But the biggest change wasn'tthe scale. Brooks recommended that Sotheby's make its commissionsnonnegotiable. "She said, 'We'll hold fast, with no discounts--what we wantis profits,'" recalls a director who was at the meeting. "'We'll compete onservice, not on price. If we lose consignments, we lose them.'" Accordingto the board member, Brooks added, "Let Christie's buy market share, but itwould be crazy for them to undercut us and beat their own brains out."

What the board didn't know was that Brooks was already meeting in limos andrestaurants with Christopher Davidge, her counterpart at Christie's,colluding to set identical fees and refuse discounts so that sellers couldno longer shop between the two houses. With the price war over, Sotheby'sprofits started climbing. The conspiracy was in place that would foreverloosen Taubman's grip on Sotheby's.

Whether Taubman told Brooks to make a deal with Christie's --as Brooks nowclaims he did--is still under investigation. Taubman insists, through hislawyers, that he's innocent. And his ex-lieutenants swear by his ethics.Richard Kughn, former president of his real estate firm, says Taubmanwouldn't build in any part of the country where kickbacks to contractors orpoliticians were de rigueur. Kughn's successor, Robert Larson, recalls thatin the 1970s, Prudential Insurance, Taubman's partner in the Woodlandshopping center in Grand Rapids, returned a check, claiming Taubman wasoverpaying. Prudential was technically right. But Taubman decided that ashe understood the deal, Prudential deserved the larger payment. "It's notin the man's character to do something illegal," says Larson.

But documents supplied to federal prosecutors last January by Davidge afterhe was sacked by his boss, French luxury-goods czar Francois Pinault, aresaid to provide evidence that the plot began with a 1993 conversationbetween Taubman and Christie's then-chairman, Sir Anthony Tennant.Prosecutors are currently weighing whether to indict Taubman; if convicted,he faces a maximum sentence of three years in jail.

Insiders say it's only a matter of time before Sotheby's is sold. The listof potential buyers includes Bernard Arnault, who heads LVMH and is said tocovet the auction house for his luxury-goods portfolio. Taubman, who lostan estimated $ 600 million in the perilous real estate market of the early1990s, may have to sell or borrow against his Sotheby's stock to pay hisshare of the damages. Most of all, his friends say, the thrill is gone. "Itwasn't a big investment, but for Al it was a very romantic one," Max Fisheronce said. Friends of both men say Fisher is heartbroken by Taubman's woes.But for Fisher--as for other members of the board who took matters intotheir own hands--duty comes before friendship.

In the end, neither Taubman nor Baron will control Sotheby'sfuture--Taubman because of his legal woes, Baron because his attempted coupsimply failed. But both men gained partial victories: The board'sindependent actions saved the value of their investments. Taubman and Baronmay soon be gone from the scene. And all that will remain of the Taubmanera is a splendid glass cathedral, in which a new owner can display histrophies and patrons of the art world can pray for a good price on aPicasso. (Fortune, December 18, 2000)

SUPERMARKETS: 3 Alleged of Underpaying Night Janitors-----------------------------------------------------A coalition of civil rights and labor lawyers filed a lawsuit last ThursdayNovember 30 against three major supermarket chains and a national buildingservices contractor, alleging systematic underpayment of janitors who cleanthe stores at night.

The suit, which seeks class-action status, was filed in Los Angeles CountySuperior Court on behalf of an estimated 600 janitors. It namedAlbertson's, Ralphs and Vons, as well as Houston-based Encompass ServicesCorp., a contractor that provides janitors to the stores. All deniedwrongdoing. The suit was filed by the Mexican American Legal Defense andEducational Fund and several area law firms.

The lawsuit alleges that the markets "implemented a scheme to evaderesponsibility for janitors' wages and job benefits by pretending to hirejanitors indirectly through a contractor while retaining control over thework the janitors perform." It asks for back pay and punitive damages and acourt order that the janitors become employees of the markets or Encompass.

A Times story this year documented supermarket janitors who worked sevennights a week, starting at midnight, with no overtime pay, workers'compensation insurance or protective gear. Most were paid in cash or withpersonal checks, with no payroll taxes deducted. Some said they were paidless than the minimum wage. Most were recent immigrants from rural Mexicowho were recruited by subcontractors of Encompass.

With nearly $ 4 billion in sales a year, Encompass is a young andfast-growing firm that claims to be the largest building-maintenancecontractor in the nation. The firm provides janitors to numerous retailoutlets through a pyramid of contractors and subcontractors. On the NewYork Stock Exchange, Encompass shares fell 25 cents to close at $ 3.63.

Encompass spokeswoman Jeanne Buchanan said she had not seen the lawsuit andcould not comment on specific claims. However, she said the company'ssubcontractors are required to comply with federal and state laws."Encompass takes its obligations under the law very seriously," she said.

Spokesmen for the supermarket chains emphasized they do not employ thejanitors directly.

"Albertson's is not related in any way to Encompass," the company said in awritten statement. "Therefore, it has no direct control over the employeesof Encompass."

Similarly, Kevin Herglotz of Vons said, "These janitors do not work for us.Encompass is a separate company. . . . We are not aware of any labor lawviolations or investigations against Encompass. If anything isolated hasoccurred, we do not condone it." The 40-page lawsuit contends that themarkets, which once directly hired their janitors, saved millions ofdollars a year by contracting out the work. But store managers continued tosupervise and direct the janitors and approved their work at the end ofeach shift. Because of that control, the suit claims, the supermarketsshould be held jointly liable for back pay and punitive damages.

It also claims the markets should have known the janitors were routinelyunderpaid and that problems were pointed out by state investigators andunion representatives.

The Service Employees International Union, which represents thousands ofjanitors in Los Angeles, also joined the lawsuit, alleging that the marketsand Encompass engaged in unfair labor practices that suppressed unionwages.

At a news conference at MALDEF offices, two former Encompass janitors spokeof their experiences. Maria Tona Orea said she worked at a Santa MonicaRalphs for several months without a break. After asking for a day offChristmas Eve, she said, she was fired.

Guadalupe Flores worked at numerous supermarkets in Arizona, Florida andCalifornia for Encompass subcontractors over the last four years. "Allthose years, they never paid me overtime," he said.

Flores now works for a union contractor at a Stater Bros. store in Anaheim,where he earns $ 9 an hour with time-and-a-half for anything more than 40hours a week. (Los Angeles Times, December 1, 2000)

The plaintiffs in two of the cases, both filed in the U.S. District Courtfor the District of New Jersey, have filed responses supporting transfer.

All of the actions allege that Toys R Us contracted with Coremetrics tocollect personal information from customers' computers without theirknowledge or consent by planting "cookies" -- strings of identifyingcomputer code -- on their hard drives.

The plaintiffs allege that Coremetrics gathered their names, addresses,telephone numbers, buying habits, Web-surfing histories, credit cardnumbers and bank account information, which it could then share with thirdparties.

The defendants deny that the information Coremetrics gathered is sharedwith any third parties and assert that the data was used only for internalinformation management purposes.

Of the 12 federal lawsuits, all filed in August, seven were lodged in theDistrict of New Jersey where Toys R Us has its principle place of business.Three were filed in the Northern District of California and two in theWestern District of Texas.

All of the actions claim that the defendants have violated the same threefederal statutes: 18 U.S.C. @ 1030, 18 U.S.C. @ 2510 et seq. and 18 U.S.C.@ 2701 et seq. The complaints allege improper interception and disclosureof electronic communications; unjust enrichment; invasion of privacy;negligence; misrepresentation or active concealment; and breach ofcontract. In addition, several of the complaints allege violations of stateconsumer-fraud laws.

In their motion for coordination and transfer, the defendants argued thatcoordination in the Northern District of California would promote the justand efficient conduct of the actions. They said it would also help avoidconflicting or inconsistent rulings, repetitive and burdensome discovery,and conflicting-class certification decisions.

The defendants noted that Coremetrics is headquartered in San Francisco,within the Northern District of California, and that its records andwitnesses are located there. Toys R Us also has a strong corporate presencein California, with dozens of stores and distribution centers and 7,000employees within the state, the defendants pointed out.

The proposed plaintiff classes are either identical or substantiallyoverlapping, the motion stated, varying only with respect to the extent ofthe usage of the Web sites. The defendants suggested that U.S. DistrictJudge Maxine M. Chesney be assigned to preside over the coordinated suits.Judge Chesney has already been assigned to hear two of the three actionsfiled in the Northern District of California.

Mindy Robbins and Marisa Dearman, plaintiffs in two of the New Jerseycases, filed responses to the motion to transfer supporting the defendants'request to assign the cases to the Northern District of California.

The motion to transfer was filed on behalf of the defendants by Dennis J.Block of Cadwalader, Wickersham & Taft in New York and Dean J. Zipser ofMorrison & Foerster in Irvine, Calif. (Electronic Privacy LitigationReporter, October 30, 2000)

The lead defendant in the suit, eBanker, is described as an onlinefinancing company with its headquarters in Denver. The second corporatedefendant, American Fronteer Financial Corp., a Colorado company withoffices in New York City, is eBanker's corporate predecessor. The thirdcorporate defendant, eVision USA.COM Inc., is a public holding companylocated in Denver. American Fronteer is a stock brokerage and eVisionsubsidiary, according to the complaint.

The suit also names the following director and officer defendants: FaiChan, chairman, president and CEO of eBanker and chairman and president ofeVision; Robert Trapp, president of American Fronteer, director andsecretary of eBanker, and director and managing director of eVision; DavidChen, an eBanker director; Tong Wan Chan, a business manager of AmericanFronteer, eBanker and eVision, and an eVision director; Gary L. Cook, CFOand director of eVision, treasurer of eBanker, and CFO of AmericanFronteer; and Jeffrey Busch and Robert Jeffers Jr., both eVision directors.

"The individual defendants, creating a web of domestic and foreigncorporations, used their controlled and interrelated companies andfraudulent documents and misleading statements to induce the plaintiffclasses to invest substantial moneys in certain of the defendant companieswithout disclosing such investments were intended to generate funds for thepersonal benefit of the individual defendants, to the detriment of theplaintiff classes," according to the complaint filed by Michael Halperin,M.D., and Donald Kern, D.D.S., on behalf of all similarly situatedinvestors.

According to the suit, offering materials for eBanker and eVision failed todisclose that the companies were not being operated as represented inprivate stock offering memorandums, and that corporate directors andofficers were receiving allegedly improper stock options.

The 11-count complaint makes claims for securities fraud under Section10(b) of the Securities Exchange Act, insider trading under Section 20(A)of the Securities Exchange Act, breach of fiduciary duty and common-lawfraud. The plaintiffs are seeking class certification and at least $70million in damages.

The investor plaintiffs are represented by Debra J. Guzov of Guzov & Rellain New York.

Calif. Suit Charges Trading Company With Defrauding Investors on Internet

According to the SEC, 2,600 people have invested at least $156 million withTLC. Many of the investors are alleged to be senior citizens.

The suit asserts that Cossey and Williams siphoned off at least $28.3million in investors funds to pay other investors as part of a Ponzischeme, and for personal investments such as racehorses.

Acting on a motion by the SEC, the court has issued a temporary restrainingorder freezing the defendants assets and appointing a temporary receiver totake over the companies.

The defendants are charged with civil violations of the anti-fraudprovisions contained in Section 10(b) of the Securities Exchange Act andSection 17(a) of the Securities Act, as well as violation of the securitiesregistration rules under Sections 5(a) and (c) of the Securities Act.

Also named in the suit are Thomas G. Cloud and his company, Cloud andAssociates Consulting Inc., which sold the allegedly bogus securities andreceived at least $1 million in commissions.

The injunction by District of Nevada Judge Lloyd D. George freezes thedefendants' assets and was issued following a request by the SEC, which isattempting to protect investor funds, according to the commission.

The SEC's suit filed last month alleges that Egan used the Web sitewww.brycar.com to sell interest in two allegedly fraudulent investmentpools. The commission says the Web site posted false financial informationand that its representations about risk- and tax-free investments wereequally false.

The complaint goes on to assert that Egan withdrew $380,000 from BryCar'sBankAmerica account and deposited it into his personal bank account.

The SEC says that transaction left BryCar's account with a zero balance.The money was allegedly used by Eagan for consumer purchases, according tothe SEC.

The suit makes claims for fraud under Section 10(b) of the SecuritiesExchange Act and Section 17(a) of the Securities Act, and for failure toregister as a broker-dealer in violation of Section 15(a) of the SecuritiesAct.

The SEC is asking the court to order disgorgement with prejudgment interestand for civil monetary penalties. (E-Trading Legal Alert, October 27, 2000)

VESTIN MORTGAGE: Developer Alleges of Unfair Tactics in Loan Penalty--------------------------------------------------------------------Developer Howard Bulloch is suing Vestin Mortgage, formerly known as DelMar Mortgage, seeking more than $ 10 million in damages for alleged fraud.The lawsuit contends that Vestin and Michael Shustek, chief executiveofficer at Vestin, used unfair tactics to obtain penalty payments for loansand violated state and federal securities laws.

'It's totally without merit, and we're going to counterclaim,' Shusteksaid. 'This was filed in state court two months ago, and it was dismissed.'

But Keith Rooker, an attorney representing Bulloch, said the dismissal'represents a decision on the part of my client to litigate the matter infederal court.'

The federal suit was filed Nov. 22 on behalf of Desert Land and Casa MalagaMotel, two entities controlled by Bulloch, and Bulloch as an individual.The defendants include: Owens Financial Group Inc., Vestin, ShustekInvestments Inc. and Shustek as an individual.

Shustek declined to discuss specific allegations, saying he had not had anopportunity to read the suit.

The lawsuit alleges that Shustek said he established an account in the CookIslands to protect his assets and has been removing assets 'from the UnitedStates and/or concealed such assets to make himself judgment proof.'

It argues that Shustek may flee, because he and his companies are beinginvestigated by federal officials for numerous possible criminal and civilviolations, including money laundering.

Vestin has denied the money laundering allegations, claiming it is aninnocent victim.

The suit alleges Shustek systematically diverted assets from his companiesfor his own personal benefit. The filing mentions payments of hundreds ofthousands of dollars that the plaintiffs claim were diverted and paid toShustek Investments.

The lawsuit claims Owens Financial was involved in the transactions, eventhough it lacks a required state mortgage brokerage license.

In court papers, Bulloch stated Del Mar made a $ 13 million loan in 1998 sohe could buy real estate identified as Blue Diamond property. Bulloch saidhe still owes $ 8.4 million on the loan.

In August 1999, the lawsuit claims that Vestin refused to honor acommitment to make a $ 34.5 million loan to Bulloch and his companiesunless some of the Blue Diamond loan was paid down. Bulloch said hecomplied with the demand.

In August 1999, the plaintiffs said they borrowed $ 34.5 million to acquirereal estate adjacent to Las Vegas Boulevard near McCarran InternationalAirport. The suit states that loan was repaid in August.

The defendants, however, collected millions of dollars in penalty fees andsold interests in those fees to investors, according to the plaintiffs'filings. The suit contends the investments were not registered with federalor state officials, as required.

Some of the allegations, if proven, could be grounds for revoking Vestin'sstate license, mortgage brokers say.

Scott Walshaw, the state's commissioner of Financial Institutions, said hewasn't aware of the suit. But Walshaw said he would be reluctant tointervene in matters involved in a pending lawsuit.

In addition to seeking a judgment for alleged damages, Bulloch is askingU.S. District Judge Kent Dawson to prohibit the defendants from blockingthe sale of the Blue Diamond property.

After the closing, the judge then could direct repayment of the $ 8.4million loan with some of the proceeds, the plaintiffs said. (Las VegasReview-Journal (Las Vegas, NV), November 30, 2000)

* SKorea To Allow Minority Shareholders To Take Class Action In 2002--------------------------------------------------------------------The government plans to allow minority shareholders to file collectiveclass action law suits against management of companies listed on the KoreaStock Exchange, beginning 2002, as part of reforms to improve corporategovernance, Finance and Economy Minister Jin Nyum said.

"The MoFE is talking with the Justice Ministry over a plan to introduce aclass action system from 2002 in phases," Jin said at a meeting withjournalists.

Jin said the economy will embark on a normal growth track from the secondhalf of next year if restructuring be carried through, with ongoingeconomic difficulties peaking out in the first quarter of next year. (AFX -Asia, December 1, 2000)

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